Ep20 "Risk and the Fundamental Tradeoff of Corporate Finance"
All Else Equal: Making Better Decisions
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The Role of Firms in Providing Insurance to Employees
Firms often have employees that are not as good as you would hope. And we asked the question, why doesn't your boss just get rid of these employees immediately? The wage includes an insurance piece where the company ensures the worker and therefore pays a lower wage than otherwise. What firms provide are bosses, people who look over the shoulder of workers,. That way control the moral hazard.
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